Odaily News “If tariffs mean a stronger dollar, higher inflation, and diminished prospects for rate cuts in the near term, then this means lower global liquidity for risk assets,” brokerage analysts said in a note to clients. “Over longer time horizons, as governments take on higher debt and higher deficits, leading to further currency devaluation, Bitcoin has relative value relative to the dollar, as is evident in Bitcoin’s long-term compounding history. But in the short term, Bitcoin is correlated with risk assets. Therefore, the sell-off in cryptocurrencies is not surprising.”
Bernstein analysts believe that in the long run, the Trump administration believes that cryptocurrencies are strategically important to government governance and national finances, aiming to control inflation by reducing deficits, cost-cutting departments of the government efficiency department led by Elon Musk, and increasing energy production. While foreign governments may retaliate against tariffs by selling U.S. Treasuries, Bernstein expects sovereigns to hoard gold and Bitcoin as economic buffers, and the United States will lead the shift to support cryptocurrencies, and more countries may follow suit.